FINANCIALS 2019
KU
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3. Summary of Accounting Policies
(continued)
De-recognition of financial assets
The Company derecognises a financial asset when
the contractual rights to the cash flows from the
asset expire, or when it transfers the financial asset
and substantially all the risks and rewards of
ownership of the asset to another party.
Impairment of trade and other receivables
The Company has applied the simplified approach
to measuring expected credit losses, which uses a
lifetime expected loss allowance. To measure the
expected credit losses, trade receivables have been
grouped based on days overdue. The amount of
expected credit losses is updated at each reporting
date to reflect changes in credit risk since initial
recognition of the respective financial instrument.
f) Impairment
The carrying values of property, plant and
equipment are reviewed for impairment at each
reporting date, with the recoverable amount
being estimated when events or changes in
circumstances indicate that the carrying value
may be impaired.
The recoverable amount of property, plant and
equipment is the higher of fair value less costs to
sell and value in use. Depreciated replacement
cost is used to determine value in use. Depreciated
replacement cost is the current replacement cost
of an item of plant and equipment less, where
applicable, accumulated depreciation to date,
calculated on the basis of such cost.
g) Leases
The Company assesses whether a contract is or
contains a lease, at inception of the contract. The
Company recognises a right-of-use asset and
a corresponding lease liability with respect to all
lease arrangements in which it is the lessee, except
for short-term leases (defined as leases with a lease
term of 12 months or less) and leases of low value
assets (such as tablets and personal computers,
small items of office furniture and telephones). For
these leases, the Company recognises the lease
payments as an operating expense on a straightline
basis over the term of the lease unless another
systematic basis is more representative of the
time pattern in which economic benefits from the
leased assets are consumed.
The lease liability is initially measured at the
present value of the lease payments that are not
paid at the commencement date, discounted
by using the rate implicit in the lease. If this rate
cannot be readily determined, the Company uses
its incremental borrowing rate.
Lease payments included in the measurement of
the lease liability comprise:
• Fixed lease payments (including in-substance
fixed payments), less any lease incentives
receivable.
• Variable lease payments that depend on an
index or rate, initially measured using the index
or rate at the commencement date.
The lease liability is presented as a separate line in
the Consolidated Statement of Financial Position.
The lease liability is subsequently measured by
increasing the carrying amount to reflect interest
on the lease liability (using the effective interest
method) and by reducing the carrying amount to
reflect the lease payments made.
The right-of-use assets comprise the initial
measurement of the corresponding lease
liability, lease payments made at or before the
commencement day, less any lease incentives
received and any initial direct costs. They are
subsequently measured at cost less accumulated
depreciation and impairment losses.
Right-of-use assets are depreciated over the
shorter period of lease term and useful life of the
underlying asset. If a lease transfers ownership of
the underlying asset or the cost of the right-ofuse
asset reflects that the Company expects to
exercise a purchase option, the related right-ofuse
asset is depreciated over the useful life of the
underlying asset. The depreciation starts at the
commencement date of the lease.
The right-of-use assets are presented as a separate line
in the Consolidated Statement of Financial Position.
The Company applies AASB 36 to determine whether
a right-of-use asset is impaired and accounts for
any identified impairment loss as described in the
‘Property, Plant and Equipment’ policy.
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